Just weeks before it is due to release its Q2 earnings on Aug 16, Walmart shocked markets after the close when it slashed its profit outlook for Q2 and FY2023.

The full statement indicates that the warnings we laid out about the pain from inventory liquidation and the "bullwhip effect" are finally here:

Walmart provided a business update today and revised its outlook for profit for the second-quarter and full-year, primarily due to pricing actions aimed to improve inventory levels at Walmart and Sam's Club in the U.S. and mix of sales.

Comp sales for Walmart U.S., excluding fuel, are expected to be about 6% for the second quarter. This is higher than previously expected with a heavier mix of food and consumables, which is negatively affecting gross margin rate. Food inflation is double digits and higher than at the end of Q1.

This is affecting customers' ability to spend on general merchandise categories and requiring more markdowns to move through the inventory, particularly apparel.